It’s hard to argue, but the travel industry has been through some rough years. Compared to 2019, there have been more than 1 billion fewer international arrivals, prompting many railway companies and airlines to reevaluate their strategies. And, even though both domestic and international travel is predicted to make a comeback, the seeds of tomorrow must be sown today! The current market environment presents multiple opportunities to build loyalty among aspiring travelers so that when the industry recovers, they can become valuable customers. And what better way to do it than with a travel rewards program?
In this guide, we’ll showcase not only the best courses of action for companies to take if they wish to have an enticing travel loyalty program, but also the various features and technologies required for success. So strap in and take flight!
Key Takeaways – TL; DR
- There is a forecasted growth of vacation-goers both domestically and internationally
- Travel rewards programs need to disrupt the industry, just like they did in the 80’s
- Some of the emerging opportunities include streamlined enrollments and more emphasis on privileges and special treatment
- Setting up scoalitions and using partner rewards can unlock new horizons
- Being innovative might require a full revamp and a rethinking of the core concept
Table of Contents
What Is a Travel Rewards Program?
Travel rewards programs are a catch-all term for the loyalty programs run by various travel businesses, including frequent flyer programs, railway loyalty programs, travel agency reward systems and cruise line reward programs, just to name a few. The goal of a travel rewards program is to provide extra incentives for customers to travel with a specific brand. Loyalty programs usually allow members to travel for lower fees based on the number ‘miles’ or points the member has collected. Access to VIP lounges, complimentary drinks and upgrades to baggage allowance are also common perks in these rewards programs.
The travel industry’s recovery has been uneven and sporadic. Economic concerns are taking center stage just as many travel brands prepare to end their elite status extensions. Traveler loyalty is up for grabs and we should expect to see the fight for share of travel wallet intensify. Travel brands will need to meet the twin challenges of retaining the loyalty of returning travelers as well as competing to acquire new customers. There has never been a better time for travel brands to know more about their customers.
The Recent Shift in the Landscape of Travel Loyalty Programs
Even though reward programs have been around in some capacity since the 1700s, loyalty programs as we know them were born around 1981, with the introduction of the American Airlines frequent flyer program. The AAdvantage loyalty program initiated a transformation of the loyalty market, as many similar companies introduced their own solutions.
This, however, led to oversaturation within the travel industry, and it became very difficult for newcomers to stand out with their rewards programs, while long-standing brands aimed to increase revenue yield instead of innovating their existing programs.
For so long, frequent flier programs were specifically tied to business travelers. We know it will take a while before FFPs get back to normal. There were far fewer miles earned on flight and travel activities in the last year. So, one of the business problems to solve for travel and hospitality brands is how to keep members engaged when loyalty programs aren’t top of mind. Earn and burn of their currencies via online commerce partners will play an enormously large role in this field, in combination with travel programs also becoming important players in the payment space.
All of this changed after the pandemic, which sort of de-escalated travel rewards programs to an earlier lifecycle stage. Right now, instead of a steady number of avid travelers, there’s a predicted boom of vacationers, which will prove to be a retention challenge, just like in the old days. And for savvy travel businesses, this can be an opportunity to become industry trailblazers and set a new course for the vertical, just like American Airlines did.
The Biggest Challenges for Travel Rewards Programs
In the post-Covid era, ‘old-school’ travel rewards have lost their appeal in large part because the concept is no longer sustainable. According to a report by Arrivia, only 42% of people used their rewards to lower the cost of a trip. This most likely stems from the fact that there are fewer frequent flyers overall. In other words, if people travel less, they won’t accumulate enough ‘miles’ to reap the full benefits of a travel loyalty program.
As COVID-19 derailed travel plans across the world, companies have to adopt their marketing strategy. There are three tips for travel businesses who are looking to build long-lasting loyalty. First, they have to stay in touch with their customers wherever they’ve opted in to receive marketing communications. Omnichannel marketing is essential in today’s market. Secondly, they should show that they understand their customers by accurately predicting the customer journeys and keeping the brand top of customers’ minds. Lastly, they need to capture customer feedback. Zero-party data is necessary data that should be collected whenever possible.
Another noteworthy highlight of Arrivia’s survey is that only 49% of customers say earning points on bookings is important, meaning that half of the intended audience isn’t engaged by the traditional point system that has been around in the industry since 1981. The fact that 51% of travelers are looking for more than transactional (hard) benefits, can be perceived as a positive, though, as it opens up plenty of room for experimenting with more experiential, privilege-driven rewards.
For travel brands, it’s important to understand individual customers’ travel preferences and deliver experiences that match those preferences. To develop a rewards program that builds long-lasting loyalty, teams need to be able to access a single view of the customer and to use that data to power individual-level offers in real time. To be successful, it’s critical to invest in tooling that allows you to understand customer needs and orchestrate tailored loyalty experiences based on that information.
7 Tips To Seize New Opportunities With Your Travel Loyalty Program
One big reason to come up with a new, innovative concept for your travel rewards program is that the industry has, slowly but steadily, started to regenerate. So there’s no time to waste, because once tourism is back in full swing it will be too late to think about new retention strategies.
Times have never been more challenging and yet potentially rewarding for brand loyalty marketing in the travel industry. While consumers are longing to reinvigorate travel bookings after 2 years of pandemic withdrawal, inflationary cost pressures create new uncertainties and tendencies towards lower-priced white-label brands, particularly for volume market providers. Two key factors are fit to make brands come as loyalty winners out of the crisis: First, an alignment of values with their top customers creates a sense of community and deeper emotional connections. Second, an altered or decreased share of wallet in these challenging times should not disregard customer lifetime value and inherent loyalty strength of your brand lovers.
To help you get a head start on customer loyalty, we have 7 innovative tips on how to make sure your travel reward program flies higher than the competition’s.
Tip #1: Shake Up Your Value Proposition
It’s important to highlight that you don’t have to completely reinvent the wheel with your loyalty program. Simply shake things up a bit. For instance, completely abandoning the ‘miles’ system might be risky, as many customers expect a way to reduce their costs, even if they don’t make full use of the system.
Instead, strive to place the emphasis on new program elements and program types, such as:
Mixing existing program elements with new ones would naturally lead to a hybrid-style loyalty program, which is the best solution if you are looking to cover a wide variety of KPIs.
When dealing with a more complex rewards program, make the value proposition as clear as possible, because if the program is convoluted or the rules and earning method aren’t explained well, customers will be more likely to switch to the competition.
Include a go-green element in the loyalty program design. As travellers are travelling with vengeance now, and the push for sustainability is getting stronger, brands that incentivise their members for environmentally friendly behaviour will stand out from the rest. Just think about Etihad’s Conscious Choices program.
Tip #2: Ditch the Overly Long Registration Process
To this day, many travelers are unwilling to enroll in a travel loyalty program (especially while at the airport or railway station) because they assume it will take ages. But advances in loyalty programs mean the registration process only takes a couple of minutes nowadays, and can be done online.
People travel for different purposes. Understanding the customer’s travel objective is very important for travel brands to design personalized rewards programs to meet all kinds of preferences. In order to achieve that, travel brands need to understand their customers and segment them into different “interest groups”. Offer something to each person as if you knew them personally, like an old friend. Creating an emotional connection between customers and brands is the key to winning their hearts in the long run.
Nevertheless, the key to boosting acquisition numbers for a loyalty program is to make the enrollment process as quick and seamless as possible. The rule of thumb is to ask as few questions as possible during the registration, and keep detailed inquiries for later. Then, once members have enrolled, offer them a small reward, like bonus miles or a one-time freebie, in exchange for completing a lengthier questionnaire in their customer profile, where you can ask everything, down to whether they prefer a seat next to a window.
Tip #3: Experiences Are More Important Than Ever
All it takes is one negative experience to turn a customer away. That’s especially true today — news travels faster than ever in the age of social media. That means that a poor experience can cause you to lose not one, but several potential customers. That’s why experiences and long-term engagement in loyalty programs are so important.
Because sustainability has become increasingly important to the consumer, price sensitivity of those consumers has diminished as they understand sustainability comes at a price. That brings extra complexity to companies in the travel industry trying to survive. We expect that the industries’ focus will therefore shift even more from transactional to emotional Loyalty Marketing Strategy to increase CX.
When someone is part of a loyalty program, having access to various benefits makes them less likely to view a bad experience as a net negative. Of course, it’s still possible that they say “I’ll spend all my miles on my next trip, and I’m out”. To avoid this, think long-term and offer tiers: the more time and effort a member spends in achieving a tier level, the more reluctant they will be to switch to another program, as it would mean they’d have to start all over.
Tip #4: Place More Emphasis on Soft Benefits, Privileges & Members-Only Content
Earlier we discussed Arrivia’s findings, where 49% of participants claimed that earning points on booking was important. So what kind of reward systems should you offer for the remaining 51%?
Many travel reward programs — especially airline loyalty programs — have been utilizing soft benefits, like access to VIP lounges, waitlist priorities, complimentary seat selection, free Wifi access and free drinks, for decades now. Placing emphasis on these benefits and giving members a straightforward way to earn them, would definitely improve travelers’ overall experience.
Here are a few ideas:
- Spin the prize wheel to win one-time priority access to all services at the airport
- Create a perks program where low-value privileges, like lounge access and priority service, are available for all members, but they need to join a paid VIP club for more valuable benefits
- Gear the reward experience around exclusive content, like guides on how to make the most out of a vacation in a specific region, or a behind-the-scenes look at luxury travel properties
Tip #5: Expand Your Horizons With Partner Rewards
Partnerships and partner rewards have always been the backbone of travel rewards programs. By creating a joint proposition with hotels or car rental services, program members could earn miles and use discounts when booking accommodation. Similarly, partnering with credit card companies or financial institutions for a joint offer (booking flights with a specific card type or applying for a special type of insurance) is predicted to be a key partnership for both industries.
As life returns to a ‘new normal’, loyalty marketers in travel will need to re-assess whether their programme matches these new customer needs. A good place to start for everyone is identifying what type of customers you have in your active base, understanding their needs and wants, and matching these to your reward portfolio. Adding value to members’ lives more broadly is also going to be an important feature in the travel industry moving forward. This value-add can come in the form of brand partnerships, enhancing their experience on the journey, or during those key pre and post-travel moments.
This mutually beneficial relationship should definitely be nurtured, but running a creative partner rewards program requires a flexible and modernized back-end. Travel brands who are in the process of digitalizing should seek out pure-play loyalty management platforms because they are specialized in flexible program management and engaging reward journeys — even across multiple brands.
For instance, the future of partner rewards can be a journey where booking a ticket at an airline company could unlock a discount for a specific product in an airport store (based on the member’s preferences). If the customer carries through and redeems the offer, they will unlock a new deal for a one-time free spa visit in the hotel of their choosing, and so on.
Tip #6: Bring Together Multiple Brands Under a Coalition
Although partnerships are an important aspect of travel loyalty programs, when it comes to the true coalition loyalty structure, it’s more recommended for airports, railway companies, or any other travel business with a heavy retail presence.
Modern coalition loyalty programs would allow these businesses to directly involve tenant brands in the loyalty program and create enticing cross-brand reward campaigns, while maintaining control over the program itself. However, remember that coalition programs are a delicate balancing act, and require a loyalty technology that offers these capabilities:
- The ability to manage the clearing and settlement of tenant brands
- Extended reporting capabilities
- Tenant and offer management features
- Ways to enroll and track guest customers
Tip #7: Don’t Be Afraid to Revamp
With all these features and strategies in mind, you might be wondering whether you should revamp your existing loyalty program. Though this is a tough decision, which may require a lot of internal discussion, what we know is that, across the globe, 8 out of 10 companies with an existing loyalty program plan to revamp their existing loyalty program within the next three years — according to our Global Customer Loyalty Report 2023.
Though the report is based on a cross-industry survey, it was a clear takeaway that, following the pandemic, there are many reasons — other than dissatisfaction — to want to revamp a loyalty program. Many organizations seek to upgrade their rewards program in order to keep things innovative by adding new features, such as gamification. As such, revamping your travel rewards program could be the missing piece required to keep customers engaged — even while travel is still down.
5 Noteworthy Travel Rewards Program Examples
In order to give you a broader perspective about the current state of travel reward programs, here are five travel loyalty program examples from bus, railway, airline and airport companies, and the reasons they are considered noteworthy.
1. Carnival – VIFP Club
International cruise line Carnival calls its loyalty program ‘Very Important Fun Person Club’ for a reason: they don’t let convoluted and complex reward rules stand in the way of people’s fun. Therefore, the program is based on an easy-to-understand tiered system that incentivizes seafarers to keep choosing Carnival.
- There are five tiers in total, and customers can earn points for each day spent on cruises
- Customers qualify for the second tier on their second cruise vacation, but the remaining tiers require a given number of points
- High-tier benefits include a one-time free cabin upgrade, guaranteed seating during dinners, priority debarkation, and one-time free entry to the casino tournaments.
Why it works:
- The program is straightforward and easy to understand
- Carnival aims for long-term engagement and repeat bookings with its tiers
- There are some benefits even on lower tiers
- High-end rewards are all privilege-based
2. Emirates Skywards
Emirates is the fourth-largest airline in the world (and the largest in the Middle East) and offers some of the most elite flight experiences out there, coupled with a loyalty program that rewards travelers with both high and low lifetime value.
- Miles can be earned through booking flights at Emirates or over 15 partner airlines, or by pooling it together in a family account
- The Miles earned with each flight are determined by the route, fare type, class of travel, as well as the member’s current tier
- There’s a huge assortment of rewards, from free tickets to partner rewards and tiered privileges, like waitlist priority
Why it works:
- Emirates offers plenty of ways to earn points, accommodating a wide variety of travelers
- The reward list is extensive, ensuring that everyone can find incentives they like
- The optional subscription-based club offers further perks for travelers determined to make the most out of their membership
3. Priceline VIP
Online travel agency Priceline introduced a free travel rewards program that helps travelers rack up more and more benefits (both financial and VIP privileges), no matter whether members book hotels, cars, flights, hotels or cruises.
- There are four tiers in total and members instantly qualify for the first one upon enrollment
- Customers can reach higher tiers by making a set number of bookings or by being a Priceline Rewards credit card holder
- Rewards include discounts on specific booking types, priority booking, and the Best Price Guarantee.
Why it works:
- There is a huge selection of financial benefits to choose from
- It’s very convenient to level up, because customer can earn points through a variety of booking options
- Reward-hungry members can skip right to the third level by signing up for the loyalty program’s credit card
4. SNCF Connect – My Thalys World
One of the most recognized railway loyalty programs out there belongs to the national railway company of France, Société nationale des chemins de fer français (SNCF). The program, My Thalys World, is open to everyone using the company’s service.
- The program has two types of currencies: member points, which counts towards reaching new tiers, and Miles, which are awarded after each €1 spent
- There are three tier levels; higher tier levels boost the number of Miles members get for traveling
- Miles can be spent on Thalys experiences, Thalys discounts or tickets, museum tickets, and gifts.
Why it works:
- Higher tiers boost the number of Miles earned, which leads to more value for less money for loyal travelers
- The tiered benefits are heavily privilege-driven, increasing the comfort and traveling experience for high-tier members
- Partner rewards, like giftcards and museum tickets, adds more variety to the rewards selection
5. Auckland Airport – Strata Club
Travelers at New Zealand’s Auckland Airport are in for a treat if they decide to join the company’s loyalty program, the Strata Club. It’s a hybrid-style program, mixing earn & burn, tiered, and coalition program elements.
- Booking parking tickets and shopping online at any airport shop grants members points
- Points can be turned into discounts for parking or at any partner shop
- There are four tiers, which are based on overall spend instead of points, that offer benefits like free drinks or parking upgrades
- The loyalty program is part of the Auckland Airport app, which can be used for identification at airport stores
Why it works:
- The loyalty program and airport app are tied together to boost adaptability and encourage members to frequently use the app
- Parking is a crucial point for travelers, and the loyalty program heavily emphasizes it
- Digital loyalty cards are far more convenient for customers to keep and use than traditional plastic cards
It’s Time to Take Off With Your Travel Rewards Program
Travel loyalty programs have a long and rich history, but they have arrived at a turning point, where they need to start innovating and look for uncharted paths in customer engagement. Here at Antavo, we specialize in enterprise-level loyalty technology that helps you unlock new opportunities and create never-before-seen reward campaigns. So start a discussion with our top experts by booking a demo or sending us an RFP.
Feeling ready to start brainstorming a concept for your new travel rewards program? Download our handy concept-building worksheet that will guide you through the most important steps.